The Risk Report: 2022 Edition
When portfolios don't deliver outcomes as expected the number one question is "Why?"
The Risk Report: 2022 Edition has the answers.
Anytime someone invests, they do so with a specific outcome in mind. But as the saying goes, the best laid plans often go awry. We examined 280 institutional equity portfolios, representing more than $250 billion in assets, and what we found may surprise you.
The 280 analyses at the heart of “The Risk Report” were conducted by identifying compensated and uncompensated risks in portfolios to inform adjustments needed, consistent with our core philosophy: investors should be compensated for the risks they take — in all market environments and any investment strategy.
Initially published in 2020, the Risk Report surfaced six common drivers of unexpected results. Two years later the additional analysis of $50 billion of assets demonstrates institutional investors faced similar or even exacerbated challenges, from a portfolio's exposure to uncompensated risks to the performance-hindering “cancellation effect."
See PDF linked above.
Focus on Equities: Uncertainty and Volatility Create Opportunity
Individual stock prices move around much more frequently than business value. At Morningstar Investment Management, we embrace stock price volatility as it provides opportunities to improve our portfolios. We are more optimistic about the long-term outcomes for our portfolios today than we were at the start of 2022. Here's why.
In defense of defensive fixed income: The case for adding duration
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Sinking sentiment: When a bad mood is good news for markets
This year, investor sentiment has sunk amid a historically challenging economy. Is consensus now the right place to be, or do investors run the risk of missing out on some of the best long-term buying opportunities?